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Kari Ratio PDF

This document analyzes key financial ratios for Tata Consultancy Services (TCS) for years 2014-15 and 2013-14. It discusses ratios such as current ratio, quick ratio, debt-worth ratio, gross profit ratio, net margin, asset turnover, return on assets, return on investment, account receivable turnover, and sales to asset ratio. The analysis shows that some ratios have increased from 2013-14 to 2014-15, such as current ratio and asset turnover, while others have decreased like net margin, indicating room for improvement in converting revenue to profit.

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Mohinudeen Khan
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106 views18 pages

Kari Ratio PDF

This document analyzes key financial ratios for Tata Consultancy Services (TCS) for years 2014-15 and 2013-14. It discusses ratios such as current ratio, quick ratio, debt-worth ratio, gross profit ratio, net margin, asset turnover, return on assets, return on investment, account receivable turnover, and sales to asset ratio. The analysis shows that some ratios have increased from 2013-14 to 2014-15, such as current ratio and asset turnover, while others have decreased like net margin, indicating room for improvement in converting revenue to profit.

Uploaded by

Mohinudeen Khan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
You are on page 1/ 18

RATIO ANALYSIS OF TATA

CONSULTANCY
SERVICE(TCS)
PRESENTED BY,
KARISHMA JAIN
INTRODUCTION
1. Tata Consultancy Services Limited (TCS) is an Indian multinational information
technology (IT) service, consulting and business solutions company.

2. TCS is one of the largest Indian companies by market capitalization($80 billion).


RATIOS
1. Current ratio
Current ratio = Current Assets
Current Liabilities

Year 2014-15 = 48813.00 Year 2013-14 = 42897.69


20318.24 15670.31
= 2.40 = 2.737
INTERPRETATION
1. Current ratio is classified as a liquidity ratio. It is a measure to determine the
company’s ability to pay its current liabilities through its current assets.

2. If the current ratio of the company is on the higher side, this may imply that the
resources are not being fully utilized.

3. How to Reduce Current Ratio?

• Increase Short Term Loans

• Leaner Working Capital Cycle


• Quick ratio = cash + Account receivable
Current liabilities
Year 2014-15 = 38995.98 Year 2013-14 = 32672.24
20318.24 15670.31
= 1.91 = 2.08
INTERPRETATION
1. Ideally, quick ratio should be 1:1

2. If quick ratio is higher, company may keep too much cash on hand or have a
problem collecting its accounts receivable.

3. It measures the ability to use its quick assets (cash and cash equivalents,
MARKETABLE securities and accounts receivable) to pay its current liabilities.
Debt-worth ratio = Total liabilities
Net worth

Year 2014-15 = 21718.36 Year 2013-14 = 17235.03


50634. 76 49194.76
= 0.42 = 0.35
Gross profit ratio = Gross profit
Net sales

Year 2014-15 = 25808.74 Year 2013-14 = 25401.86


97878.32 83446.10
= 0.26 = 0.30
INTERPRETATION
1. Measures profitability at the Gross Profit level.

2. Decreasing the gross profit margin temporarily may be beneficial in the long run.

3. A business may decrease its gross profit margin by lowering the cost of the goods
it sells or by using higher quality, and thus more expensive, materials to make the
goods.
Net Margin = Net profit after tax
Net sales

Year 2014-15 = 19852.18 Year 2013-14 = 19163.87


97878.32 83446.10
= 0.21 = 0.229
INTERPRETATION
1. Net profit margin is a key financial indicator used to assess the profitability of a
company.

2. The higher the margin is, the more effective the company is in converting revenue
into actual profit.

3. Here, it is decreasing. It shows that company is not that effective to earn a good
profit.
Asset turnover = Net sales
Average total assets

Year 2014-15 = 97878.32 Year 2013-14 = 49194.76


70399.33 59652.825
= 1.39 = 0.82

Efficiency of asset use in sales generation


Return on assets ratio = Net profit after tax
Total assets

Year 2014-15 = 19852.18 Year 2013-14 = 19163.87


73669.88 67137.78
= 0.269 = 0.285

Measures the efficiency of Total Assets in generating Net Assets Total Assets Profit
Return on investment = Net profit after tax
Net worth

Year 2014-15 = 19852.18 Year 2013-14 = 19163.87


50634.76 49194.76
= 0.39 = 0.389

Measures the efficiency of Net Worth in generating Net Investment Net Worth Profit
Account receivable turnover = Sales
Account receivable

Year 2014-15 = 97878.32 Year 2013-14 = 83446.10


20437.94 18230.40
= 4.78 = 4.58

Measures the rate at which Accounts Receivable are being Receivable Accounts
Receivable collected on an annual basis.
Sales to asset ratio = Sales
Total assets

Year 2014-15 = 97878.32 Year 2013-14 = 83446.10


73660.88 67137.78
= 1.33 = 1.24

Measures the efficiency of Total Assets in generating sales

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